On July 1 of year 1, Riverside Corporation (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,200,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $200,000 of the goodwill had been impaired and wrote down the goodwill by $200,000 for book purposes.

in year 1, the book-tax difference associated with goodwil that RC should report is:

1. What booktax difference associated with its goodwill should RC report in year 2? Is it favorable or unfavorable? Is it permanent or temporary?

\begin{tabular}{|l|l|} \hline Book-tax difference & $ \\ \hline Is it favorable or unfavorable? & Favorable \\ \hline Is it permanent or temporary? & Temporary \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline Book-tax difference & \\ \hline Is it favorable or unfavorable? & Unfavorable \\ \hline Is it permanent or temporary? & Temporary \\ \hline \end{tabular}